The Future of Consumerist

Over the last twelve years, Consumerist has been a steadfast proponent and voice on behalf of consumers, from exposing shady practices by secretive cable companies to pushing for action against dodgy payday lenders. Now, we’re joining forces with Consumer Reports, our parent organization, to cultivate the next generation of consumer advocacy.

Stay tuned as Consumerist’s current and future content finds its home as a part of the Consumer Reports brand. In the meantime, you can access existing Consumerist content below, and we encourage you to visit Consumer Reports to read the latest consumer news.

Now that the price of oil has dropped — you should expect some of those skyrocketing grocery bills you’ve been paying to drop, right? Yeah… probably not.

It’s called “sticky prices” — the tendency for companies to delay both raising — and then lowering prices in response to changes in the cost of raw materials. You see, what you pay at the grocery store has more to do with what competitors charge than it does with how much it actually costs to produce the item.

The AP explains:

Prices have been going up broadly across whole categories of products, meaning competitors have been hiking prices in unison. For example, both Anheuser-Busch Cos. Inc. and SABMiller’s U.S. unit have been raising the price for beer, with neither one too worried that the price hikes will push customers to their competitor.

“They may be upset about it, but you really have fairly limited options as a consumer,” Perner said.

For prices to drop, consumers have to hope that companies’ competitive juices start flowing again. The drop in oil and ingredient prices is creating a high-stakes game of chicken in the shopping aisle, Perner said.

If companies keep their prices at current levels, they can reap higher profit margins. But if one company starts cutting prices to lure customers away from competitors, it could start a price war.

“As soon as the first (company) in a category reduces prices, the others will follow suit. But they’re all hoping the other one doesn’t” cut prices, Perner said.

…And in case you’re wondering if the same applies to airfares… the answer is yes. Don’t expect the airlines to let go of any of those new fees without a fight.